India markets regulator to take steps to make algo trading cheaper

MUMBAI (Reuters) - India’s market regulator said on Wednesday it will take steps to make algorithmic trading cheaper for investors, even as it called for stricter monitoring of such trades amid concern about fair access to markets.

The logo of the Securities and Exchange Board of India (SEBI) is seen on the facade of its headquarters building in Mumbai, India March 1, 2017. REUTERS/Shailesh Andrade

The steps will include providing tick by tick data feed to all trading members free of charge and making services for co-location, or servers that are placed at the site of exchanges, more accessible, the Securities and Exchange Board of India (SEBI) said in a release after a board meeting.

In India, algorithmic trading, like elsewhere around the world, is becoming a bigger part of daily trading, prompting regulators to question whether investors with no access to the rapid form of trading are at a disadvantage.

The SEBI also tightened the penalty rules by narrowing the range of algo orders to 0.75 percent of the last traded price compared to one percent earlier.

It also ensured strict monitoring of such trades by asking stock exchanges to allot a unique identifier to “each algorithm approved and each order generated” to establish “an audit trail”.

In late 2016, the SEBI proposed potential limits on so-called algo traders, including “speed bumps” to randomly delay execution of some orders, and forcing exchanges to take orders from co-located servers and other sources alternatively, removing another advantage enjoyed by high-frequency trading platforms.

The SEBI on Wednesday also announced a slew of measures geared towards enhancing corporate governance, including expanding the eligibility criteria for independent directors and mandating additional company disclosures, including more details on auditing firms.